Rep. Barney Frank’s effort to scale back a new regulatory agency over consumer financial products is starting to dampen some of the lobbying opposition.
Frank (D-Mass.) said on Tuesday that he would carve out a series of non-financial businesses from the proposed Consumer Financial Protection Agency (CFPA) in an effort to blunt K Street criticism and win over Democrats who were wary about the new agency’s power as originally envisioned by the White House.
“NADA is pleased that Chairman Frank has indicated that auto dealers are not to be regulated by this new agency,” said Bailey Wood, a NADA spokesman. “The chairman’s decision reflects the fact that dealers are already subject to numerous federal and state financial regulations.”
NADA ran print ads last week against the agency proposal as the association held a fly-in to lobby lawmakers.
Jason Oxman, CEA’s spokesman, said the association is awaiting the full details of Frank’s bill, but found much to like in the initial proposal.
“We are heartened and appreciate Chairman Frank’s memo,” Oxman said.
The proposed agency has emerged as one of the most controversial elements of President Barack ObamaBarack ObamaSocial media users rip Fox graphic on economy under Trump, Obama Live coverage: Trump rally duels with White House correspondents' dinner Wasserman Schultz: Trump's agenda 'irrational and extreme' MORE’s efforts to revamp financial regulations and has been the source of major lobbying efforts from a wide range of industries.
The agency would serve as a single federal regulator to oversee products such as home loans and credit cards.
While some lobbying groups struck a new tone on Wednesday, the largest financial industry associations remain overwhelmingly opposed to the creation of a new agency. Frank’s changes did not go far enough, for instance, to win the support of associations such as the Financial Services Roundtable and American Bankers Association (ABA).
Meanwhile, the U.S. Chamber of Commerce is leading a coalition of 25 lobbying groups in a multimillion-dollar campaign against the proposal.
The coalition effort so far has focused primarily on the impact the new agency would have on small businesses and non-financial companies, such as butcher shops and bakeries. CEA signed a recent letter as part of the Chamber coalition.
David Hirschmann, president and CEO of the Chamber’s Center on Capital Markets Competitiveness, said the coalition could not support a new regulatory agency that would compete with existing bank regulators that oversee firms’ safety and soundness.
Some coalition members, such as the American Land Title Association (ALTA) and National Association of Mutual Insurance Companies (NAMIC), on Wednesday said Frank’s changes did little to shift their views.
Kurt Pfotenhauer, chief executive of ALTA, said Frank’s memo may have “muddied the waters” and made it unclear when some businesses, such as law firms, fall under the proposed agency’s oversight.
Other members of the coalition said the agency, either as envisioned by the White House or by Frank, was not a big concern for them because it was not something that would affect most of the companies they represent.
“We’re in it only at the margins,” said Jade West, senior vice president of government relations for the National Association of Wholesaler-Distributors.
“We’re in the coalition just to stay informed.”
The agency as envisioned by Frank would oversee fewer businesses than the White House had originally proposed. His proposal exempts accountants, tax preparers, real estate brokers and agents, lawyers, auto dealers and consumer reporting agencies, among others.
Centrist Democrats had worked behind the scenes with Frank on many of the changes announced on Tuesday.
Still, the agency proposal will draw heated debate in the House and later in the Senate. Republicans are opposed to the agency concept, and centrist Democrats have other concerns. Atop the list of unsettled issues is whether the new agency should have the power to pre-empt regulatory actions taken at the state level.
“I think pre-emption is likely to be the single largest issue yet to be resolved,” said Rep. Jim Himes (Conn.), a New Democrat and supporter of pre-emption.
Himes said the agency proposal and Frank’s changes haven’t won over all centrist Democrats, but that most believe there is momentum behind the legislation.
“Most of us say that if we can make the lines of accountability and mission clear, that’s a step in the right direction from where we are today — where consumer protection is the ugly stepchild,” Himes said.